TechnipFMC plc

Hello, and welcome to the TechNIP FMC fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. We ask that you limit your questions to one plus one follow-up. I would now like to turn the call over to Mr. Matt Seinsheimer. Please go ahead, sir.

Thank you, Lisa. Good morning and good afternoon and welcome to TechNEEP FMC's fourth quarter 2021 earnings conference call. Our news release and financial statements issued yesterday can be found on our website. I would like to caution you with respect to any forward-looking statements made during this call. Although these forward-looking statements are based on our current expectations, beliefs, and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10 , most recent 10 , and other periodic filings with the U.S. Securities and Exchange Commission. We wish to caution you not to place undue reliance on any forward-looking statements which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise. I will now turn the call over to Doug Ferdihart, Techneap FMC's chair and chief executive officer.

Thank you, Matt. Good morning and good afternoon. Thank you for participating in our fourth quarter earnings call. 2021 was truly a breakout year for Techneap FMC. We are confident that we have entered a multi-year upcycle for energy demand with continued strength in inbound orders expected for our company through at least 2025. 2021 marked the inflection in order activity with total company inbound awards growing an impressive 33% versus the prior year to 6.8 billion. Total company full year adjusted EBITDA was 580 million with an adjusted EBITDA margin of 9.1%, a 300 basis point improvement on the prior year. Free cash flow from continuing operations was $523 million, more than double the high end of our guidance range. Beyond this much improved financial performance in 2021 were several notable accomplishments. We started the year with a partial spinoff of Technip Energies, successfully creating two industry-leading companies. Since the time of the separation, we have sold the majority of our remaining stake, generating proceeds of more than $1 billion. When combined with our strong free cash flow, these sales have contributed to a significant reduction in net debt, which declined nearly 70% over the course of the year to $678 million at year end. As an industry-leading pure play company, we concluded the year by hosting our Analyst Day, providing a comprehensive update on the path forward for Technip FMC. During the event, we highlighted the tremendous success of IEPCI, the industry-changing commercial model we introduced just five years ago, which has strengthened our offering, expanded our alliances, and positioned our company as the subsea partner of choice. We demonstrated how we are continuing to drive change with industrialized product suites like Subsea 2.0, which are transforming how we operate our business while also lowering the carbon footprint of conventional oil and gas developments. We introduced new energy ventures, which will position Technip FMC as a key player for the development of novel sources of offshore energy, as well as carbon transportation and storage. And lastly, we provided our longer term view of the energy market. which serves as the basis for our intermediate-term financial outlook that extends to 2025 and illustrates the significant long-term potential we see for Technip FMC across both traditional and new energy markets. Turning to segment inbound, the order momentum experienced in 2021 extended across the company, with Surface Technologies' full-year inbound increasing nearly 70% versus the prior year to $1.8 billion. Orders outside North America more than doubled when compared to 2020. This included a significant portion of the segment's largest ever award, a multi-year contract from Abu Dhabi National Oil Company to provide wellheads, trees, and associated services. This contract is a resounding endorsement of our 40-plus year relationship with ADNOC. The Middle East represents one of our largest market opportunities this decade. Under the frame agreement with ADNOC, Technip FMC will further grow in-country talent and expand existing manufacturing, assembly, and test capabilities in Abu Dhabi in order to deliver the company's complete portfolio of surface wellheads and trees locally. This follows the recently completed expansion of our manufacturing capabilities in Saudi Arabia, which supports our commitment to develop a diverse and capable local workforce as part of Saudi Aramco's In-Kingdom Total Value Add Program, or ICTVA, and Saudi Vision 2030. In North America, Our recently launched digital solution, eMISSION, is the next level of optimization for surface production facilities. Using process automation and data, the system provides constant monitoring and adjustments in real time to minimize flaring by up to 50% while maximizing oil production. The technology is core to our iProduction offering and can be applied in existing facilities globally. Turning to Sub C. Full year inbound orders of $5 billion increased 24% versus the prior year. We experienced further adoption of IEPCI in the year, including further geographic expansion. Operators using the integrated approach for the first time included Karun, whose Petula field will be our first IEPCI in Brazil, Tullow, which utilized our subsea studio digital solution to optimize field layout for the Jubilee development in Ghana, and Petrodas, which will utilize both IEPCI and our subsea 2.0 platform for the Limbayong Deepwater Development Project Offshore Malaysia. The improved inbound orders in the year also reflected continued strength in South America. In Guiana, we were awarded the subsea production system for ExxonMobil's yellow-tilled development, our fourth consecutive award within the Staybrook development. In Brazil, we further strengthened our relationship with Petrobras, announcing several awards in the year, including three long-term vessel charters, which will serve the Brazilian market for multiple years, a contract to supply subsea manifolds utilizing our second generation all-electric robotic valve controller for the Marlim and Vador fields, an award to supply equipment and services for the Buzio 6 through 9 fields, and three frame agreements for the manufacture of more than 500 kilometers of flexible pipe over the next four years. For the full year, IEPCI, direct awards, and subsea services represented more than 60% of our total inbound, a testament to our innovative leadership, intimate client relationships, and strong track record of execution. Importantly, these orders often provide us with a unique opportunity set that goes beyond the publicly identified projects and speaks to both our market positioning and industry relationships, providing Technip FMC with the most comprehensive view of the market. Our subsea opportunity list has expanded to a record level of more than 20 billion, providing increased visibility into the middle of the decade. The continued growth in part reflects the very robust front-end activity experienced throughout 2021. Given the extensive opportunity set in our strong visibility, we remain confident that we will see a multi-year subsea upcycle with the potential for inbound orders to reach 8 billion in 2025. Looking more closely at 2022, our early engagement in client partnerships supports our view that subsea tree awards for the total industry are likely to exceed 350 a level not experienced since 2013. We anticipate subsea inbound order growth of up to 30% in 2022, with IAPCI direct awards and subsea services approaching 75% of our inbound orders. Our growth expectations also highlight continued expansion in greenfield opportunities, as well as increased tieback activity with growth from these smaller projects coming primarily from the North Sea, Gulf of Mexico, and West Africa, all regions in which we have a strong presence and are well-positioned due to our extensive installed base. With this higher level of activity, we also anticipate an acceleration in the market adoption of Subsea 2.0. We estimate 50% of our subsidiary orders over the next two years will be 2.0. And this will provide us with the volume needed to leverage a configure to order or CTO operating model. While not a new concept, CTO is revolutionary to our industry and allows us to leverage the efficiencies of standardization while still addressing the unique requirements of individual projects. all of which can be selected from a product catalog that unlocks efficient manufacturing and servicing of our equipment. CTO has enabled us to create a value stream that delivers a more competitive offering to the market, resulting in a 25% reduction in cost, a 50% reduction in product delivery time, and manufacturing throughput that is more than doubled within our existing footprint. Looking beyond CTO, which is all about how we operate our business, we continue to pave the way forward with the introduction of new subsea technologies, including all electric systems. Electrification offers advantages to all subsea wells and is particularly well suited for the development of long tiebacks, gas fields, water injection, and carbon transportation and storage. In subsea services, we expect revenue growth of approximately 35% by the end of 2025. This growth will be driven by market expansion, new technology introductions, and other commercial initiatives. Our revolutionary Gemini remotely operated underwater vehicle is transforming the ROV industry through disruptive technology and delivering optimized performance. Our first two Gemini systems were successfully deployed with Shell, and based on this success, the client has awarded us contracts for three additional Gemini systems. We are now expanding this service across our customer base. Additionally, Our integrated life of field model is designed to unlock the full potential of subsea infrastructure by transforming the way services are delivered and proactively addressing the challenges faced over the life of a field. Looking further ahead, we are confident that oil and gas will remain an important part of the energy mix for an extended period of time. While this view is supported by the outlook for higher global energy demand, We also recognize that we are in the early stages of the energy transition. To address the evolving markets, we recently announced the formation of New Energy Ventures, or NEV, where we are leveraging our core competencies, capabilities, and investments made over the last several years. We have appointed a dedicated leadership team who has extensive industry knowledge and are focusing on our contribution to the energy transition through three main pillars, greenhouse gas removal, offshore floating renewables, including wind, wave, and tidal energy, and hydrogen. In these target areas, we see a total addressable market of close to $80 billion for Technip FMC by the end of 2030. And we anticipate NEV inbound orders of $1 billion through 2025. In order to accelerate our growth, We are leveraging our extensive experience in project integration to approach these opportunities with a new execution model, integrated offshore novel energies, or simply I-1. We have demonstrated our ability to successfully collaborate with key industry players over the last year. We have made announcements regarding several strategic agreements and partnerships, some of which have already resulted in real project opportunities. In greenhouse gas removal, last year we entered into a long-term strategic alliance with Talos Energy to develop and deliver technical and commercial solutions for carbon capture and storage projects along the United States Gulf Coast, where feed activity has been initiated on multiple projects. In offshore renewables, We announced just last month that our partnership, Magnora Offshore Wind, was successful in the Scott Wind leasing round application, where the proposed development project will have a total capacity of approximately 500 megawatts, which could power more than 600,000 homes in the United Kingdom. And today, we are announcing a hydrogen storage MOU with Store Engie, a subsidiary of Engie, which has the potential to accelerate the development of a ready to scale up solution for the underground storage and utilization of green hydrogen across Europe. We are making solid and tangible progress and are fully committed to playing a meaningful role in this challenging yet exciting period of transition. We believe we have the right competencies, resources and teams to make this a very successful journey. We are confident that as the energy transition accelerates, so too will the opportunity set for Technip FMC. I will now turn the call over to Elf to discuss our financial results.